Pentagon Expected to Approve CH-53K Program Despite Cost

The Pentagon is poised to review -- and probably approve -- a new helicopter from Lockheed Martin Corp. to transport heavy cargo for the Marine Corps in a program valued at as much as $29 billion.

The Defense Acquisition Board has scheduled a March 30 meeting to review whether to approve low-rate production for the first 24 of a planned 200 King Stallion helicopters. The initial contract would cover two of the aircraft capable of lifting 27,000 pounds (12,200 kilograms), according to Defense Department documents. Quantities would grow annually, to four next year and 14 in fiscal 2021, according to the latest published acquisition report.

Approval to proceed would be the first major acquisition decision under Defense Secretary James Mattis. It would also begin to unlock the revenue Lockheed expects to reap from sales, spares and repairs over the life of the program. The latest budget plan increases spending to $1.9 billion in fiscal 2020 from $892 million this year, including development.

The “big” revenue potential for the helicopter designated the CH-53K was the primary incentive for Lockheed’s $9 billion acquisition of the Sikorsky helicopter unit from United Technologies Corp. in 2015, Bruce Tanner, Lockheed’s chief financial officer, said in an interview. He said the King Stallion is the same size as its predecessor, the Super Stallion, but can haul triple the cargo.

“Frankly, when we acquired Sikorsky it was the 53K program that drove most of our valuation as to why we wanted to own Sikorsky,” Tanner said. “It was the fact of that aircraft.” (end of excerpt)